Salary sacrifice school fees and the Australian minimum wage

Salary sacrifice school fees and your minimum wage entitlements

Salary sacrifice school fees is an arrangement where you agree to reduce your pre-tax salary in exchange for your employer paying some or all of your children’s school fees. This can lower your taxable income, but it does not change the legal minimum pay you must receive. This guide explains how salary sacrifice interacts with the national minimum wage, modern award rates, and the super guarantee.

The legal minimum wage floor

The Fair Work Commission sets the national minimum wage each year. From 1 July 2026, the adult national minimum wage is $26.44 per hour or $1,004.90 per week for a full-time worker (38 ordinary hours). Casual employees receive a loading of at least 25%, making the casual minimum $33.05 per hour. These figures are the absolute floor for award-free and agreement-free national-system employees.

If you are covered by a modern award, the award rate applies and is often higher than the national minimum. For example, the lowest ongoing classification in a modern award cannot fall below $26.44 per hour from 1 July 2026. Introductory rates (first six months) are capped at $25.74 per hour or $978.10 per week. Junior rates, apprentice rates, and supported wages may be lower, but they are set by the award or by law.

Salary sacrifice school fees does not change these minimums. Your employer must pay you at least the applicable minimum wage or award rate in cash or ordinary earnings before any salary sacrifice deduction. The sacrificed amount is a benefit you receive, not a reduction in your legal pay.

Separating the legal minimum from other pay concepts

It is important to distinguish between the legal minimum, survey averages, award rates, and negotiated salaries.

• Legal minimum: The national minimum wage ($26.44/h) or the relevant award rate, whichever is higher. This is the floor.
• Survey average: The Australian Bureau of Statistics (ABS) reports that in May 2026, full-time adult ordinary-time earnings averaged $2,083.70 per week, and all employees averaged $1,579.20 per week. These are market averages, not legal requirements.
• Award rate: A modern award sets minimum wages for a specific industry or occupation. These rates are often above the national minimum. For example, a hospitality award may have a higher base rate plus penalty rates.
• Negotiated salary: An enterprise agreement or individual contract can set a higher rate than the award or national minimum. Salary sacrifice is typically part of a negotiated package.

Salary sacrifice school fees is a feature of a negotiated salary package, not a way to lower the legal minimum. The Fair Work Ombudsman enforces the minimum standards, and any salary sacrifice arrangement must leave you with at least the minimum cash or ordinary earnings.

Super guarantee and salary sacrifice

The super guarantee requires your employer to pay 12% of your ordinary time earnings into your super fund from 1 July 2026. Ordinary time earnings generally include your gross salary but exclude salary sacrificed amounts (unless your employer agreement says otherwise). This means if you salary sacrifice $100 per week for school fees, your super may be calculated on your reduced OTE. However, the employer must still pay super on the full OTE as defined in the relevant law or agreement. Check your award or enterprise agreement for specific rules.

Award-free junior rates and salary sacrifice

If you are under 21 and award-free, your minimum wage is a percentage of the adult rate. For example, a 16-year-old award-free employee earns 47.3% of $26.44, which is $12.51 per hour (casual $15.64). Salary sacrifice cannot reduce this cash amount. The same principle applies: the legal minimum must be paid in cash or ordinary earnings before any sacrifice.

Internal resources

For more information on which pay floor applies to you, see Which minimum wage applies. To compare rates across awards and classifications, visit Rate tables. Our Guides section covers topics like salary packaging and super. For details on how we calculate figures, see How the figures work.

Summary

Salary sacrifice school fees is a useful way to reduce taxable income, but it does not override the national minimum wage or award rates. Your employer must pay you at least the legal minimum in cash or ordinary earnings before any salary sacrifice deduction. The super guarantee is calculated on your ordinary time earnings, which may exclude sacrificed amounts. Always check your award or agreement and consult the Fair Work Ombudsman if you are unsure about your entitlements.

Important note

This information is for orientation only. It is not a pay determination, tax advice, or legal advice. The adult weekly national minimum is the published $1,004.90 figure. Multiplying $26.44 by 38 lands 18 cents lower because of rounding in the order. Casual weekly figures on this site are the published casual hourly rate times 38 ordinary hours, with no penalty rates.